I came across this really interesting article on how India is now the second-largest smartphone manufacturer in the world. To start with, India is the world’s most populous nation with over 1.4 billion people, a quarter of whom are between 15-29 years old. This demographic advantage, combined with rising disposable income and government-backed policies, has positioned India as a key global player in electronics manufacturing, particularly in smartphones.
1. India’s Rise in Smartphone Manufacturing:
- A decade ago, India met only 25% of its domestic mobile phone demand, relying heavily on imports.
- Today, domestic production meets 97% of demand, with manufacturing value soaring from $3 billion (FY15) to $49 billion (FY24).
- Exports have skyrocketed, making smartphones the fourth-largest export item from India in 2023-24.
- India is now the sixth-largest smartphone exporter in the world.
2. Key Drivers of Growth:
- Government Incentives:
- Production Linked Incentive (PLI) Scheme: Grants financial incentives to manufacturers, drawing major players like Apple, Samsung, and Foxconn to India.
- Phased Manufacturing Programme (PMP): Supports local component production to reduce reliance on imports.
- Make in India: This initiative has driven mobile phone shipments to 2 billion+ units between 2014-2022.
- China+1 Strategy:
- Due to geopolitical tensions and supply-chain risks, companies are moving production out of China.
- While China and Vietnam saw declines in mobile phone exports, India’s exports grew 40% in 2023-24, gaining from the global shift.
- Domestic Demand & Cost Efficiency:
- The Indian market, valued at $36 billion (FY24), continues to grow at a 13% CAGR.
- Low labor costs attract both domestic and international investment.
3. Challenges & Global Competition:
- Electronics exports account for just 4.7% of India’s total exports, compared to China’s 27% and Vietnam’s 40%.
- High import tariffs on components and limited participation in global value chains (GVCs) remain key hurdles.
- To compete, India must further streamline policies and develop a robust domestic supply chain.
4. The Road Ahead:
- India aims for $300 billion in electronics production by 2025-26, with mobile phones contributing 40% of this target.
- With exports now exceeding imports, India has transitioned into a smartphone manufacturing powerhouse.
- Further policy support, skill development, and infrastructure upgrades will be crucial to securing India’s position as a global hub.
Would love to hear from the community – Do you think India can become the next big global manufacturing hub? What policies or reforms could further accelerate this growth?
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Here’s the reference link.
This is a fantastic summary of India’s impressive journey in smartphone manufacturing! You’ve hit all the key drivers – the demographic dividend, crucial government initiatives like PLI and PMP, and the strategic advantage gained from the China+1 shift. It’s truly remarkable how quickly domestic production has scaled to meet demand and even fuel significant exports.
To answer your question – can India become number 1? I think the potential is definitely there, but as you pointed out, bridging the gap with global leaders like China requires tackling specific challenges head-on.
Building on your points about what’s needed:
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Deepening the Ecosystem: Moving beyond assembly to high-value component manufacturing is critical. This requires sustained policy support, not just incentives for finished goods but also for creating the entire supply chain locally (semiconductors, displays, batteries etc.). This reduces import reliance and increases value addition within India.
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Infrastructure & Logistics: Efficient ports, roads, and power are non-negotiable for a globally competitive manufacturing hub. Continued investment here is key.
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Skilled Workforce: While we have the numbers, ensuring the workforce has the specific technical skills needed for advanced manufacturing and R&D is vital. Skill development programs need to align closely with industry needs.
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Consistent Policy & Ease of Doing Business: Predictable policies and further reduction in bureaucratic hurdles will continue to attract investment.
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Leveraging Financial Support Mechanisms: You mentioned the PLI scheme, which has been transformative. Alongside such large-scale incentives, understanding and utilizing the full spectrum of financial support is crucial, especially for nurturing domestic players and component manufacturers. This includes exploring various loan schemes, subsidies, and even targeted manufacturing grants that might be available for specific types of projects, R&D efforts, or investments in green technology within manufacturing. Ensuring businesses are aware of and can access all available support mechanisms will be important fuel for growth.
It’s an exciting time for Indian manufacturing. While becoming #1 is ambitious, the momentum is strong. The continued focus on building a robust domestic ecosystem, improving infrastructure, and strategically leveraging policy support seems to be the right path forward. Great discussion starter!
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Hey, really appreciate you taking the time to share such a detailed and thoughtful take — you’ve added a lot of depth to the discussion.
Totally agree with your point about moving beyond just assembling phones. If India really wants to lead the pack, we need to build the whole ecosystem here — chips, displays, batteries, all of it. It’s good to see things like the semiconductor push taking off, but we’ve got a long road ahead.
Also, what you said about skill development hit the mark. We have the numbers, sure, but getting people trained in the right kind of tech skills is what will set us apart.
And yes — financial support mechanisms are often underutilized. So many smaller players don’t even know what incentives or schemes they can tap into. Fixing that could unlock a lot more growth.
Curious to hear what others think — what’s the one thing holding us back from going all the way?
Also welcome to the MadeForTrade community! Looking forward to more of your insights.
Just to add an unique perspective, most of the so-called ‘Made-in-India’ phones still source majority of the high-end components and critical components, from China. It’s just some low-level local sourcing for raw materials, slap it together and paste a sticker of India made.
Developing the talent base and expertise needed to build semiconductor products independently will be a challenge for India, as in this situation, economic interests of the incumbents might outweigh their propensity to share knowledge.
In this regard, the US is a major ally for India, and with the Donald Trump administration looking unfavourably at China-origin supply chains, geopolitical chips are likely to fall in favour of a 100% made-in-India iPhone, and Samsung, sooner rather than later.
Local MSMEs need scale and balance sheet strength, without strong MSME/SMEs, no ancillary industry of phones or strong raw materials sourcing can be built.
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